Uncertainty surrounding the EU referendum and the National Living Wage is putting off businesses from hiring, according to a new report.

BDO's Employment Index shows that firms' intentions to hire in the coming six months has dropped from 104.8 to 102.2, the lowest level since 2014 and the biggest monthly drop since the aftermath of the financial crisis.

Peter Hemington, partner at BDO, said: "Our figures this month on hiring intentions suggest that UK businesses are starting to look harder at whether recruiting new staff is always the right answer."

The accountancy firm flagged the EU referendum and the introduction of the National Living Wage as reasons for the slowdown.

However, BDO added that the recruitment slump could lead to an increase in productivity.

Mr Hemington added: "While this trend will slow the growth of the workforce, it could signal the start of a move toward a higher investment, higher productivity economy. In the long run, this would help us generate higher living standards and more interesting jobs for UK workers."

"Our productivity ultimately determines how much we earn and the UK's performance in this area has been verging on the disastrous since the recession. Figures earlier this year showed that output per hour here is now 21 per cent below the average of our G7 partners."